[Federal Register Volume 69, Number 211 (Tuesday, November 2, 2004)]
[Notices]
[Pages 63507-63510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24541]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-552-801]


Certain Frozen Fish Fillets From the Socialist Republic of 
Vietnam: Initiation of Anticircumvention Inquiry and Scope Inquiry

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of initiation of anticircumvention inquiry and scope 
inquiry: certain frozen fish fillets from the Socialist Republic of 
Vietnam.

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SUMMARY: In response to a request from the Catfish Farmers of America 
and certain individual U.S. catfish processors, (collectively, 
``petitioners''), the Department of Commerce (``the Department'') is 
initiating an anticircumvention inquiry to determine whether certain 
imports of frozen fish fillets from Cambodia are circumventing the 
antidumping duty order on certain frozen fish fillets from the 
Socialist Republic of Vietnam (``Vietnam'') See Notice of Antidumping 
Duty Order: Certain Frozen Fish Fillets from the Socialist Republic of 
Vietnam, 68 FR 47909 (August 12, 2003) (``FFF Duty Order''). In 
addition, in response to a scope ruling request filed by Piazza Seafood 
World LLC (``Piazza'') on May 12, 2004, the Department is initiating a 
scope inquiry.

EFFECTIVE DATE: November 2, 2004.

FOR FURTHER INFORMATION CONTACT: Kit L. Rudd or Alex Villanueva, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-1385 and (202) 482-3208, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On May 12, 2004, pursuant to 19 CFR 351.225(c), the Department 
received a request from Piazza Seafood World LLC (``Piazza''), for a 
scope ruling on certain basa and tra fillets from Cambodia confirming 
that fillets made from live basa and tra fish which are a product of 
Vietnam are excluded from the antidumping duty order on certain

[[Page 63508]]

frozen fish fillets from Vietnam. See FFF Duty Order. On June 9, 2004, 
the Department issued a supplemental questionnaire to Piazza requesting 
additional information pertaining to this request. On July 7, 2004, the 
Department received Piazza's response to this supplemental 
questionnaire. On July 23, 2004, petitioners commented on Piazza's May 
12, 2004, and July 7, 2004 submissions. On October 19, 2004, Piazza 
submitted to the Department additional factual data supplementing its 
July 7, 2004, response to the Department's supplemental questionnaire.
    On August 20, 2004, petitioners requested that the Department 
conduct an anticircumvention inquiry pursuant to section 781(b) of the 
Tariff Act of 1930, as amended (``the Act'') to determine whether 
imports of frozen fish fillets from Cambodia made from live fish which 
are a product of Vietnam are circumventing the antidumping duty order 
on certain frozen fish fillets from Vietnam. Specifically, petitioners 
allege that processing in, and exporting from, Cambodia frozen fish 
fillets of the species Pangasius Bocourti, Pangasius Hypophthalmus 
(also known as Pangasius Pangasius), and Pangasius Micronemus produced 
from live fish which are a product of Vietnam constitutes circumvention 
of the antidumping duty order on certain frozen fish fillets from 
Vietnam. On October 20, 2004, Piazza submitted comments on petitioners' 
August 20, 2004, request for an anticircumvention inquiry.
    With respect to Piazza's October 19, 2004, and October 20, 2004, 
submissions, we note that due to the late filing of these submissions, 
the Department is unable to consider them for purposes of initiation of 
the requested scope and anticircumvention inquiries. We may, however, 
consider these submissions in the course of the formal inquiries.

Scope of the Order

    The product covered by this order is frozen fish fillets, including 
regular, shank, and strip fillets and portions thereof, whether or not 
breaded or marinated, of the species Pangasius Bocourti, Pangasius 
Hypophthalmus (also known as Pangasius Pangasius), and Pangasius 
Micronemus. Frozen fish fillets are lengthwise cuts of whole fish. The 
fillet products covered by the scope include boneless fillets with the 
belly flap intact (``regular'' fillets), boneless fillets with the 
belly flap removed (``shank'' fillets), boneless shank fillets cut into 
strips (``fillet strips/finger''), which include fillets cut into 
strips, chunks, blocks, skewers, or any other shape. Specifically 
excluded from the scope are frozen whole fish (whether or not dressed), 
frozen steaks, and frozen belly-flap nuggets. Frozen whole dressed fish 
are deheaded, skinned, and eviscerated. Steaks are bone-in, cross-
section cuts of dressed fish. Nuggets are the belly-flaps. The subject 
merchandise will be hereinafter referred to as frozen ``basa'' and 
``tra'' fillets, which are the Vietnamese common names for these 
species of fish. These products are classifiable under tariff article 
code 0304.20.60.33 (Frozen Fish Fillets of the species Pangasius 
including basa and tra) of the Harmonized Tariff Schedule of the United 
States (``HTSUS'').\1\ This order covers all frozen fish fillets 
meeting the above specification, regardless of tariff classification. 
Although the HTSUS subheading is provided for convenience and customs 
purposes, our written description of the scope of this proceeding is 
dispositive. See FFF Duty Order at 47909.
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    \1\ Until July 1, 2004, these products were classifiable under 
tariff article codes 0304.20.60.30 (Frozen Catfish Fillets), 
0304.20.60.96 (Frozen Fish Fillets, NESOI), 0304.20.60.43 (Frozen 
Freshwater Fish Fillets) and 0304.20.60.57 (Frozen Sole Fillets) of 
the HTSUS.
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Initiation of Anticircumvention Proceeding

Applicable Statute

    Section 781(b) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise of the same 
class or kind subject to the order is completed or assembled in a 
foreign country other than the country to which the order applies. In 
conducting anticircumvention inquiries under section 781(b) of the Act, 
the Department relies upon the following criteria: (A) Merchandise 
imported into the United States is of the same class or kind as any 
merchandise produced in a foreign country that is subject to an 
antidumping duty order; (B) before importation into the United States, 
such imported merchandise is completed or assembled in another foreign 
country from merchandise which is subject to the order or produced in 
the foreign country that is subject to the order; (C) the process of 
assembly or completion in the foreign country referred to in (B) is 
minor or insignificant; (D) the value of the merchandise produced in 
the foreign country to which the antidumping duty order applies is a 
significant portion of the total value of the merchandise exported to 
the United States; and (E) the administering authority determines that 
action is appropriate to prevent evasion of such order or finding. As 
discussed below, petitioners presented evidence with respect to these 
criteria.

A. Merchandise of the Same Class or Kind

    Petitioners state that the FFF Duty Order covers frozen fish 
fillets of the various Pangasius family to include Pangasius Bocourti, 
Pangasius Hypophthalmus and Pangasius Micronemus. Petitioners argue 
that since frozen fish fillets of these species, which are being 
imported into the United States from Cambodia, are physically identical 
to subject merchandise fillets from Vietnam, pursuant to section 
781(b)(1)(A)(i) of the Act, these fillets are of the same class or kind 
as those fillets produced in Vietnam which are subject to the 
antidumping duty order.

B. Completion of Merchandise in a Foreign Country

    Petitioners state that the frozen fish fillets which are the 
subject of the anticircumvention inquiry request are made from live 
basa and tra produced in Vietnam and processed in Cambodia for export 
to the United States. Petitioners argue that these frozen fish fillets 
are the final result of a production process that involves a multi-
stage growing process to produce the live basa and tra fish in Vietnam 
with end stage processing into frozen fillets in Cambodia. Petitioners 
therefore conclude that pursuant to section 781(b)(1)(B)(ii) of the Act 
these frozen fish fillets are merchandise completed in another foreign 
country (Cambodia) from merchandise that is produced in a foreign 
country with respect to which the referenced antidumping duty order 
applies (Vietnam).

C. Minor or Insignificant Process

    Petitioners argue that for the purposes of section 781(b)(1)(C) of 
the Act, conversion of whole live Vietnamese basa and tra fish into 
frozen fillets in Cambodia is a ``minor or insignificant process'' as 
defined by the Act. According to petitioners, the respondents in the 
original investigation argued that the final stage of processing whole 
live basa and tra fish into frozen fish fillets was minor as compared 
to the preceding steps for growing the live fish. Petitioners also 
state that since they have little information about the processing 
activities in Cambodia they feel that the best information available on 
Cambodian processing is the record of the underlying investigation 
concerning production in Vietnam. Petitioners argue that an analysis of 
the

[[Page 63509]]

revelatory statutory factors of section 781(b)(2) of the Act further 
supports their conclusion that the Cambodian processing is ``minor or 
insignificant.'' These factors include: (1) Level of investment in the 
foreign country; (2) level of research and development in the foreign 
country; (3) nature of the production process in the foreign country; 
(4) extent of production facilities in the foreign country; and (5) 
whether the value of the processing in the foreign country represents a 
small proportion of the value of the merchandise imported into the 
United States.
    Petitioners' analysis of these factors to include citations as 
appropriate, is as follows. Based on this analysis, petitioners 
conclude that the Cambodian process is ``minor and insignificant'' as 
the term is defined in section 781(b)(2) of the Act when compared to 
the Vietnamese multi-stage live fish growing process.
(1) Level of Investment
    Petitioners state they do not have access to information concerning 
the level of investment that has been made in Cambodia supporting the 
final processing of basa and tra fish. However, petitioners cite to a 
February 2001 report by the Cambodian Department of Fisheries on trade, 
marketing and processing of fish and fish products to support their 
argument that they believe the level of investment in basa and tra 
processing is minimal. See The Department of Fisheries: Trade, 
Marketing and Processing of Fisheries and Fisheries Product Review 
Technical Paper 6 (February, 2001) (``Fisheries Report''). Petitioners 
cite to this report to support their argument that even in processing 
plants where some level of foreign investment has taken place, 
facilities remain poor and unmodernized. See Fisheries Report at 12. 
Petitioners note that the report states that even those facilities 
characterized as ``modern or industrial'' by the Cambodian government 
were also described as ``extremely poor'' with ``no concept of a proper 
processing line.'' See Fisheries Report at 11-12. Petitioners cite to 
the U.S. International Trade Commission's (``USITC'') Final 
Determination and the Department's Preliminary Issues and Decision 
Memorandum in the underlying Vietnam investigation to support their 
belief that, similar to Vietnamese processing facilities, workers cut 
fillets by hand as opposed to using automated equipment as is typical 
in the United States. See Certain Frozen Fish Fillets from Vietnam, 
U.S. International Trade Commission Investigation No. 731-TA-1012 
(Final), Pub. No. 3617 (August 2003) (``USITC Final'') at I-4; Issues 
and Decision Memorandum for the Antidumping Duty Investigation of 
Certain Frozen Fish Fillets from the Socialist Republic of Vietnam 
(June 16, 2003) (``I & D Memo'') at 44. Based on these sources, 
petitioners conclude that the level of investment in Cambodian 
processing facilities is low.
(2) Level of Research and Development
    Petitioners state they rely on the record of the underlying 
investigation to support their position that the level and extent of 
research and development in frozen fish fillet processing is low. 
Petitioners cite to the verification report for An Giang Fisheries 
Import and Export Joint Stock Company (``AGIFISH'') and the USITC Final 
to support their argument that because fish fillet processing is a 
mature industry, research and development is almost entirely 
concentrated in the production of the fish rather than the end stage 
processing. See AGIFISH Verification Report (April 11, 2003) at 14-19; 
USITC Final at VI-5.
(3) Nature of the Production Process
    Petitioners argue that the processing of live basa and tra into 
fillets requires only unskilled manual labor. Petitioners cite to the 
AGIFISH Verification Report to support this argument as the report 
states that virtually every step in the process, from killing to 
placing the fillets on trays for freezing is done by hand. See AGIFISH 
Verification Report at 16-19. Petitioners point out that although U.S. 
processors may employ relatively high technology processing equipment, 
this equipment is not required to process live fish. Petitioners 
contend there is no indication that high technology processing methods 
employed in the United States processing facilities are used in 
Cambodia and it is reasonable to assume that Cambodian processing is no 
more sophisticated than processing in Vietnam.
(4) Extent of Production in Cambodia
    Petitioners state they do not know the extent of facilities that 
can process Vietnamese basa and tra into frozen fish fillets. However, 
petitioners cite to the Fisheries Report which states that as of 
February 2001 there were four ``freezing processing enterprises'' in 
Cambodia with export permits. See Fisheries Report at 11. Petitioners 
conclude that the ease with which Vietnamese basa and tra can be 
transported to Cambodia, coupled with the existence of the freezing 
processing facilities can facilitate an immediate and significant shift 
to processing Vietnamese basa and tra in Cambodia.
(5) Value of Cambodian Processing Compared to Fillets Imported Into the 
United States
    Petitioners again refer to respondents' arguments in the underlying 
investigation wherein they state that the cost of the live fish was the 
most important input in the production of subject merchandise. 
Petitioners cite to the I & D Memo to support their argument that 
because of the relatively low cost of end stage processing in Cambodia, 
the ability of fish fillet processors to compete successfully depends 
upon their ability to manage the cost of the main material input, i.e. 
whole live fish. See I & D Memo at 28.

D. Value of Merchandise Produced in Cambodia

    Petitioners argue that the evidence as noted supra in their 
submission clearly supports their position that the value of the whole 
live basa and tra produced in Vietnam is a significant percentage of 
the overall value of the frozen basa and tra fillets imported into the 
United States from Cambodia. Petitioners also restate their position 
that in Cambodia, as in Vietnam, manual, low tech processing merely 
``completes'' the product, and the overwhelming value derives from the 
whole live fish input.

E. Factors To Consider in Determining Whether Action Is Necessary

    Petitioners argue that additional factors must be considered in the 
Department's decision whether to issue a finding of circumvention 
regarding importation of Cambodian frozen fish fillets. These factors 
are discussed below.
Pattern of Trade
    Petitioners state that section 781(b)(3) of the Act directs the 
Department to take into account patterns of trade when making a 
decision on anticircumvention rulings. Petitioners argue that U.S. 
Bureau of Census import statistics demonstrate a pattern of trade 
indicative of significant evasion of the Vietnamese antidumping duty 
order. Specifically, petitioners argue that prior to issuance of the 
Vietnam antidumping duty order, virtually no frozen fish fillets 
entered the United States from Cambodia. However, starting in January 
2004, following imposition of the antidumping duty order in August 
2003, imports of frozen fish fillets under HTSUS classifications 
0304.2060.30, 0304.2060.96, and 0304.2060.43, reached commercially 
significant levels, totaling 768,000 pounds for the first half

[[Page 63510]]

of 2004, compared with no imports for the same period in 2003. 
Petitioners further argue that if Cambodian imports continue to 
increase at the current rate, they will reach more than 1.5 million 
pounds for all of 2004, compared with 70,000 pounds for all of 2003. 
Petitioners also point out that until July 1, 2004, there was no 
specific HTSUS classification for frozen fish fillets of the Pangasius 
family. However, petitioners argue, their analysis of publicly 
available Port Import Export Reporting Service (``PIERS'') data on 
Cambodian imports under HTSUS classifications 0304.2060.30, 
0304.2060.96 and 0304.2060.43 indicate that the bulk of shipments are 
comprised of frozen basa and tra fillets. Petitioners therefore 
conclude that, absent any knowledge of other types of frozen fish 
fillets currently produced in Cambodia for export to the United States, 
the majority of frozen fish fillets entering the United from Cambodia 
are basa and tra.
Other Information Not Available to Petitioners
    Petitioners argue that they have no information concerning formal 
or informal relationships, if any, between Vietnamese growers/producers 
of whole live basa and tra and Cambodian processors. Finally, 
petitioners contend they are unable to ascertain the level of 
Vietnamese exports of whole live basa and tra to Cambodia as a result 
of their inability to obtain applicable trade statistics. Petitioners 
add that even in the event such trade statistics were made available 
that the high degree of informal cross-border trade would likely not be 
accounted for in these statistics.
Analysis
    Based on our analysis of the application, the Department determines 
that a formal anticircumvention inquiry is warranted. With regard to 
whether the merchandise from Cambodia is of the same class or kind as 
the merchandise produced in Vietnam, petitioners have presented 
information indicating that the merchandise being imported from 
Cambodia is of the same class or kind as those fillets produced in 
Vietnam which are subject to the antidumping duty order. The 
merchandise from Cambodia shares physical characteristics with the 
merchandise covered by the antidumping duty order.
    With regard to completion of merchandise in a foreign country, 
petitioners have also presented information that the fish fillets from 
Cambodia are being processed in Cambodia, using Vietnamese fish as the 
input. This information is consistent with the information contained in 
the Piazza scope request. See Scope Inquiry Request from Piazza, dated 
May 12, 2004.
    With regard to whether the conversion of whole live Vietnamese basa 
and tra fish into frozen fish fillets from Cambodia is a ``minor or 
insignificant process,'' petitioners addressed the relevant statutory 
factors used to determine whether the processing of live fish is minor 
or insignificant with the best information available to petitioners at 
the time of the request. Although petitioners submitted minimal 
information that addresses the minor or insignificant factor, the 
information submitted by petitioners with respect to the level of 
investment, research and development, nature of production process, 
extent of production in Cambodia, and the value of the Cambodian 
processing as compared to fillets imported to the United States 
supports their request to initiate an anticircumvention inquiry.
    With respect to the value of the merchandise produced in Cambodia, 
petitioners rely upon the findings of the investigation, which show the 
cost of the live fish input is significant relative to the cost of end-
stage processing.
    Finally, petitioners argued that the Department should also 
consider the pattern of trade factor in determining whether to initiate 
the anticircumvention inquiry. The import information submitted by 
petitioners indicates that imports of frozen fish fillets from Cambodia 
are rising significantly.
    Accordingly, we are initiating a formal anticircumvention inquiry 
concerning the antidumping duty order on certain frozen fish fillets 
from the Socialist Republic of Vietnam, pursuant to section 781(b) of 
the Act. In accordance with 19 CFR 351.225(l)(2), if the Department 
issues a preliminary affirmative determination, we will then instruct 
the Bureau of Customs and Border Protection (``CBP'') to suspend 
liquidation and require a cash deposit of estimated duties on the 
merchandise.
Concurrent Scope Request
    On May 12, 2004, Piazza submitted a scope request asking that the 
Department confirm that frozen fish fillets processed in Cambodia from 
Vietnamese-origin whole fish are excluded from the scope of the 
antidumping duty order on frozen fish fillets. Specifically, Piazza 
argues that the whole live fish raised in Vietnam are outside the scope 
of the FFF Duty Order and that the filleting, freezing, and packaging 
process in Cambodia results in the fillets having a country of origin 
of Cambodia. Further, Piazza argues that, if the Department concludes 
that the description of the merchandise does not clearly exclude the 
whole live fish raised in Vietnam and filleted and frozen in Cambodia, 
a substantial transformation analysis demonstrates that the live fish 
would be substantially transformed into a product of Cambodia and thus 
would not fall under the scope of antidumping duty order on frozen fish 
fillets from Vietnam.
    After reviewing Piazza's scope inquiry request, the Department 
determines that it is not clear whether the frozen fish fillets 
produced from Vietnamese whole live fish are outside the scope of the 
order on frozen fish fillets from Vietnam. Specifically, a 
determination as to whether the frozen fish fillets are within the 
scope of the antidumping duty order may depend upon an analysis of the 
significance of the production process in Cambodia; therefore, further 
inquiry is necessary. Because both the anticircumvention and scope 
request may necessitate an analysis of the significance of the 
production process in Cambodia, the Department finds it appropriate to 
initiate both concurrently. In addition, at this time, the Department 
is focusing its analysis of the significance of the production process 
in Cambodia on the single processor identified by the petitioners in 
their August 20, 2004, anticircumvention request and about which 
sufficient information to initiate an inquiry has been provided. 
However, within 45 days of the date of initiation of this inquiry, if 
the Department receives sufficient evidence that other Cambodian 
processors are involved in processing Vietnamese whole live fish for 
export to the United States, we will consider examining such additional 
processors.
    The Department will, following consultation with interested 
parties, establish a schedule for questionnaires and comments on the 
issues. The Department intends to issue its final determination within 
300 days of the date of publication of this initiation.
    This notice is published in accordance with section 781(b) of the 
Act and 19 CFR 351.225.

    Dated: October 22, 2004.
Joseph A Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 04-24541 Filed 11-1-04; 8:45 am]
BILLING CODE 3510-DS-P